Charlie's Churros is a perfectly competitive firm that sells desserts in Houston, Texas. Charlie's Churros currently is taking in $40,000 in revenues, and has $15,000 in explicit costs and $25,000 in implicit costs. Holding all else constant, the price in this market will:

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In perfect competition, firms are price takers, meaning they have no control over the market price. In the long run, firms will enter or exit the market until the price is equal to the minimum average total cost, which includes both explicit and implicit costs. Since Charlie's Churros is currently making a profit, other firms will enter the market, increasing the supply and driving down the price until it reaches the minimum average total cost.

Charlie's Churros Is a Perfectly Competitive Firm That Sells Desserts